13.05.2015 10712132 – Elçim Öneç 11212047 – Şila Arslan 11112047 – Ahmet Okay 11112046 – İrem Cemre Sorguç
Final Term Project Boyner Group is joining the supermarket business for the first time. The main aim is to broaden organic segment to gain competitive advantage. Besides an organic theme cafe will be opened as well which also serves. Also, we will keep the in store ‘design by brand’ concept 1. SITUATION ANALAYSIS In general, big holdings run their operations in several product segments. For instance, Boyner Group focuses on textile, real estate property, and manufacturing of ready-made clothes. Koç Holdings operations are based on finance, energy, automotive, durable consumer products, retail, and others. Sabancı Holding has related divisions with Koç. However, when we take a look at these segments of Koç (Migros) and Sabancı (CarrefourSA), they particularly took the lead of food retail. Thus, in our project, we will work with an exceptional manner for food retail segments and consequently develop strategies to establish a successful hypermarket chain for Boyner. The company is one of the biggest fashion-based businesses in the market yet, it holds a great potential to join food retail segment without encountering significant problems. Sales volume of the retail sector in Turkey was 300 billion in 2012. The food contains 52% of the industry and 48% is non-food retail. The biggest competitors are Migros, which includes Tansaş and Macro Center and CarrefourSA. Migros and CarrefourSA are the most important food retailing groups in Turkey. 14% of stores of Migros are hypermarkets and 86% are supermarkets evidently, Migros is truly significant for people in Turkey owing to their trustworthy, innovative and highquality products. In Migros, people can choose from numerous options of food with
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different price options. Migros's sales are increased about 10% in 2013 and reached 1,985 million Turkish liras. CarrefourSA runs 28 hypermarkets and 216 supermarkets around Turkey in 2014. The annual number of visitors at the end of the year 2013 was 90 million and, number of employees was 7000. We want to catch up with our competitors by using growth rate. In addition, we will transform the traditional display in this project. In Boyner stores, customers can directly go to the desired brand without seeking it, because brand names are located over sections. In our new business, we will adopt the same design. Categories will be same, such as chocolate, legumes, delicatessen, cleaning materials, coffee, and tea etc. But our advantage is brand names will be above shelves so that we can take advantage of an unusual in-store display.
1.1.
MARKET SUMMARY
Migros
Number of Stores Yearly visitors in million number of employees Carrefour
0
200
400
600
800
1000
1200
*Summary of supermarket industry Supermarket sector in Turkey become very competitive in the last decade. There are various numbers of supermarkets, which have different trends and prospects. Under the name of grocery retailers, it differs in 5 steps. Modern grocery retailer, convenience stores, discounters, hypermarkets and supermarkets. Nowadays, healthy food consumption trend become well-known in the supermarkets. With changing prices of organic products, people started to show more interest. However, the variety of products are still exceptionally limited. The forecasts show us that demand for organic products will be very high in the future. As for Turkish
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customers, they are highly aware of gourmet ingredients and there is a huge interest for the healthy snacks and bars. Brands can benefit from this new trend.
1.2. CURRENT FINANCIAL ANALYSIS
Sales Revenue Percent Margin Gross Profit Marketing & Sales Exp. (%) Marketing & Sales Exp. * Net Marketing Contribution ROI ROS Operating Income
MIGROS 7,126,925,000 26,5% 1,894,702,000 18,9% 1,350,279,000 544,423,000 40,3% 7,63% 236,042,000
CARREFOURSA 2.600.533.776 23,8% 619.056.670 19,3% 501.903.064 117,153,606 23% 4,5% 113,680,038
CarrefourSA and Migros are supermarkets. Boyner Group is not in this sector. Consequently, we will make our estimations based on our competitors and also we will make an income statement separately for Boyner Group since it is a new sector for the company. We created the current financial statement of Boyner Group to show that they have enough resources to go into the new market. We can list Boyner Group’s income statement slots such as sales revenue 1,415,659,238, gross profit is 540,115,059, marketing and sales expense 415,047,965. Its value can help NMC, ROI, and ROS for Boyner Group. When we looked this number, NMC, ROI, ROS of Boyner Market respectively are 125,067,094, 30 percentage, 29 percentage. 1.3. MARKET DEMOGRAPHICS 1.3.1. Customer Profile Organic products attract certain types of consumers; health conscious, trend catchers and environmentalists. All of these types are aware of the consequences of consuming unhealthy foods. Most of our potential customers will be well educated. The uppermiddle class carries these traits. 1.4 MARKET AND CUSTOMER NEEDS 1.4.1 Competitive Advantages As we mentioned, we will pursue organic drift conquering the market and modify the interior display. Other hypermarkets do not consider the significance of organic products. However, we will open organic themed cafeÊ with the intention that we can pick up the slack. In addition, we will change the current product exhibition on shelves and
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customers will be able to experience the trademark display of Boyner stores in the hypermarket as well.
1.5. SWOT ANALYSIS Strengths: a Boyner Group is a reliable name in Turkey. Furthermore, to maintain its reliance, the company continuously improves its sub-brands. The company is one of the wellknown brands in the retail industry. By using its refined qualities; Boyner can also achieve a successful position in the hyper-market business. a Boyner Group announced their principal of “Unconditional Customer Happiness”. Suggests that the company particularly focuses on customer satisfaction. Due to this reason, the customers are fond of the brand. Boyner Group is strategically engaged in a CSR project called 'Nar Taneleri'. The CSR project holds an essential role for conscious customers. a By establishing an organic themed Cafeé , we can increase the profit of the company. Considering the enormous size of supermarkets, customers generally get weary during shopping. At this point, the customers can have a break in this cafeé . By this way, the cafeé will generate considerable profits and refreshed customers can continue shopping after resting. Weaknesses: a Boyner Group is relatively inexperienced in hypermarket business. a The unique shelf design may not be fancied by consumers as it will be too unconventional than the common layout. Opportunities: a Organic food trend is spreading remarkably fast. Because of this reason, the new hypermarket can attract more people. a The competitors have limited variety of organic products. To gain an upper hand in the market Boyner Group will focus on this particular segment. Threats: a In this market segment, continuous competitions between holdings are not uncommon. In Turkey, significant companies such as Koç and Sabancı Holding owns the hyper-market business thus, it can be challenging to compete with them. a The increasing amount of the organic farmers market is a possible threat to the company.
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2. MARKETING STRATEGY 2.1 Market Share Strategy
To gain market share we plan to use Turkey’s agriculture potential, it means that almost all of the organic products will be belong to Turkish farms. Also, strong inclination of purchasing from local groceries and organic food are growing trends that have taken hold with the modern consumer, so we aim to broaden the organic segment, which is quite underestimated by notable competitors. We intend to gain an upper hand by using iBeacon technology; software that pushes notifications to users as they walk around the shop. This will provide us a greater insight into customer’s preferences and we will be able to know how customers navigate the store so we will be able to rearrange and optimize the in-store experience to increase revenues. Furthermore, this technology grants us to work on our customer’s purchase history to recommend product-specific offers. 2.2 Pricing Strategy We have two different pricing strategies; value-added pricing for organic foods and market-based value pricing for regular products. 2.3 Channel Strategy Direct marketing is the most suitable for our business since organic products spoil easily. Therefore they should be delivered to stores as soon as possible, we want to eliminate distributors or any intermediaries because of possible delays, so customers would be able buy fresh products only. 2.4 Positioning Strategy For this section, we particularly focused on innovation, e-commerce and customer services. To initiate customer loyalty, our proposal is to use applications so as, our customers can redeem rewards using their smartphones. Also, we intend to fulfill the demand of new generations; instead of using cash or credit cards, Google Wallet can be used in stores. The company is known by its exclusive/ extended services and we plan to keep this image in food retailing as well. We want to embrace ‘click-and-collect’ services to encourage shoppers to visit our stores and pick up their purchases at whatever time. Our organic food-focused strategy appeals specific customer group; in-store organic food cafeé s will be available to this segment as well. As for the display, we plan to divide goods by brands instead of types, in this manner; it will be easier to spot favorite brands, which will reduce time loss.
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2.5 Communications Strategy Website, social media and applications will be used for pull communications. We want to engage our customers directly via Twitter, Facebook and Instagram with ‘Like2Buy’ button, which places a link in a brand’s profile, it redirects customers to a gallery where they can buy featured products or bookmark them. As for media communications; we determined to use billboards, SMS, TV ads, newspapers. A classic mail-order catalogue will be published and delivered to inform recent and upcoming products and promotions, this catalogue will also be available in the website. Lastly, two-for-one sales will be used for push strategy; it will create awareness for unfamiliar brands. 2.6 Offensive Strategy We will use offensive strategy. Because we will enter related new market. When we look other supermarkets, they do not take care much more organic products. Their organic market share is not enough and we determined this deficiency. We want to improve this trend in our hypermarket. Our different is that we will open organic cafeé in hypermarket. Customers can buy organic food or they can sit and they can spend a time in this cafeé . 3. PERFORMANCE ANALYSIS Boyner Group is joining the supermarket business for the first time. Consequently, our evaluation will be based on the first income statement of this new market. For this reason we assume that, our first year sales and profit possibly will be lower than Migros and Carrefour who are our most important competitors. The reason why the profit will be lower is; the image of ‘Boyner Groceries’ needs to be grasped properly in customers mind to achieve target revenue that we estimated. Throughout estimating the next year income statement, we calculated that our competitors will grow approximately 2%, as we mentioned above Boyner Supermarket’s revenue will be lower than them. Therefore, we estimated its revenue as 17,500,000 which is inferior in comparison. Because this is a new supermarket, it will expand more than its competitors on marketing & sales expenditures. So we estimated it as 20%.
MIGROS
CARREFOURSA 6
BOYNER Supermarket
Sales Revenue Percent Margin Gross Profit Marketing & Sales Exp. (%) Marketing & Sales Exp. * Net Marketing Contribution ROI ROS Operating Income
(2014) 7,126,925,000 26,5% 1,894,702,000 18,9%
(2014) 2.600.533.776 23,8% 619.056.670 19,3%
expectation (2015) 1,750,000,000 21% 367.500.000 20%
1,350,279,000
501.903.064
350,000,000
544,423,000
117,153,606
17,500,000
40,3% 7,63% 236,042,000
23% 4,5% 113,680,038
5% 1%
NMC-ROS-ROI 1. Net marketing contribution: (Gross Profit- Marketing expenses) 367.500.000 -350,000,000= 17,500,000 2. Marketing ROS: (Net marketing contribution/ Sales x100) 17,500,000 / 1,750,000,000 x100 = 1% 3. Marketing ROI: (Net marketing contribution / marketing expenses X100) 17,500,000 / 350,000,000 X100 = 5% BREAK-EVEN ANALYSIS In break-even analysis, Boyner Market has an average revenue forecast of 1,750,000 next year. If we take 1,750,000 which is expected sales and divide it with the average price of a shopping per person is (we just make an estimation for this) 50 TL. The calculation shows us that (1,750,000/50) = 35.000 people have to visit Boyner Market to reach the breakeven point.
Sources
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http://www.shoppinpal.com/beacon-technology-what-does-it-mean-for-retail-stores/ https://www.vendhq.com/university/retail-trends-and-predictions-2015 http://www.invest.gov.tr/en US/infocenter/publications/Documents/FOOD.AND.AGRICULTURE.INDUSTRY.pdf https://www2.deloitte.com/content/dam/Deloitte/global/Documents/ConsumerBusiness/dttl_cb_Food%20Value%20Chain_Global%20POV.pdf http://boynergrup.com/download/finance/tables/BOYP_20141231_SPK_TR.pdf https://www.CarrefourSA.com/ecommerce-web/Kurumsal/2014faaliyetraporlari
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